Boatnerd Discussion Forum

by KH » April 22, 2021, 7:53 pm

Cleveland-Cliffs clearly sees great value in this industry, otherwise they would not have made the moves that they have. Sure, one could argue that they wanted to protect their core mining interests, but Cliffs is obviously committed to the industry whereas other players were not. If the long-term viability of the traditional steel industry is truly that poor, it would have been more prudent for Cliffs to have sought investments in other areas. Arcelor Mittal is a global company who apparently decided to concentrate on their businesses elsewhere. AK Steel was a relatively smaller player who alone would have lacked the resources to further compete long-term against the industry's larger players. By combining the three entities, one larger and more capable company will be more efficient and better able to compete moving forward. That's where the value in the new Cleveland-Cliffs lies. Lots of people here seem to think that this type of steel operation is obsolete and has no future, but who really knows at this point? Just over one year ago, no one outside of Cliffs saw any of this coming.

by **Guest** » April 20, 2021, 3:38 pm

It seems like this vertical integration scheme has been tried before, although more from the end producer toward the mining operations rather than in this situation. However, what has changed to make such a formula so attractive in the present when several steel companies moved away from it over the past several decades? What experience does Cleveland Cliffs have in managing steel production? As far as steelmaking in the lakes region is concerned, the fact is that the newest steel mills went into operation prior to 1981 and there will come a time in which the current facilities will either have to be significantly upgraded or closed in favor of more efficient mills. I have no clue to as how Cliffs managed to make such a large acquisition but logic would dictate the sellers of the mills it did purchase had a good reason to sell. If those owners had believed there was a high likelihood of positive growth to those facilities in the future it seems unlikely they would have been put up for sale. I know that some will likely disagree with me, but the plain fact is that US steel production has been in decline since at least the late 1950s and I cannot see this trend changing any time soon. Correct me if I'm wrong, but doesn't this just leave Cleveland Cliffs and United States Steel as the last two remaining steel manufacturers with facilities directly dependent upon the Great Lakes shipping industry? Regardless of what happens, the next few years should prove interesting to see how this situation plays out.

by **Jon Paul** » April 20, 2021, 12:14 pm

Larry64 wrote:
Jon Paul wrote:It seems there are some bullish voices concerning Cliffs and this article has a detailed assessment of the company's turn around and their positioning on exporting pellets;

https://seekingalpha.com/amp/article/44 ... 1-earnings
Very interesting read. The only part of the operation they don’t own is the shipping. Now with the CML ships under their control, would it be cost effective for them to pay other fleets, or make a play for a few footers under their own flag?

Currently CML is servicing Indiana Harbor along with footers bringing in pellets, Interlake is hauling into Dearborn and VTB is delivering to Ironville. Depending on length of current contracts they seem to have the short term covered but it wouldn't surprise me to see them make a move going forward.
I found it refreshing that Cliffs management is willingly working with unions and others to build a long term plan that would benifit all those in partnership.

by **Larry64** » April 20, 2021, 10:47 am

Jon Paul wrote:It seems there are some bullish voices concerning Cliffs and this article has a detailed assessment of the company's turn around and their positioning on exporting pellets;

https://seekingalpha.com/amp/article/44 ... 1-earnings

Very interesting read. The only part of the operation they don’t own is the shipping. Now with the CML ships under their control, would it be cost effective for them to pay other fleets, or make a play for a few footers under their own flag?

by **Jon Paul** » April 19, 2021, 4:12 pm

It seems there are some bullish voices concerning Cliffs and this article has a detailed assessment of the company's turn around and their positioning on exporting pellets;

https://seekingalpha.com/amp/article/44 ... 1-earnings

by **Guest** » March 10, 2021, 8:12 pm

Guest wrote:Well, maybe the charter of the smaller ASC self-unloaders to Grand River Navigation is the first step to the dissolution of the ASC fleet. And perhaps, Cleveland-Cliffs will purchase or charter the remainder of the fleet.

- Brian

The crews of those 1,000 footers have to be wondering this as well.

by **Guest** » March 8, 2021, 4:20 pm

Well, maybe the charter of the smaller ASC self-unloaders to Grand River Navigation is the first step to the dissolution of the ASC fleet. And perhaps, Cleveland-Cliffs will purchase or charter the remainder of the fleet.

- Brian

by **Jon Paul** » March 8, 2021, 11:56 am

I think its important to note in the article I posted the link to, that Cliffs in the summary is looking to control "the resources and mechanisms for its own steel making capabilities". This includes the vertical and horizontal integration of their products and mineral resources.
I still believe that over the next year Cliffs will make a move to establish either a bare-boat charter fleet with a long term contract or a fleet of their own by purchasing existing boats such as ASC footers.

by **Under_Pressure** » March 8, 2021, 10:53 am

Hobieone wrote:Someone please correct me if I'm wrong or have a less than complete understanding, but mini mills generally produce steel from remelts of scrap and/or the addition of pig iron or direct reduced iron.
I understand that the energy efficiencies are better in minimills for BTUs/ton, they all deal with some form of "pre'processed" material; steel or iron.
Somewhere, at sometime, Iron will have to be smelted from it's ore. Chemically and metallurgically, that's an entirely different process than filling a vat with scrap and zapping it with the mother of all arc welders and a couple of thousand KwH.
Recycling is good and can be efficient for both man and material, but sooner or later, somewhere, there is going to have to be a miner taking it from the earth. And for that effort, there will always be boats waiting to carry it. What's left for debate, is number and frequency.
Just my take on it . thnx

You're exactly right. People act like simply melting scrap in minimills can take the place of ALL steel production and mines will just be shut down- it can't. Scrap has been an ingredient in steel production since the beginning; it's not like we just buried steel scrap in landfills until a couple decades ago. Where a lot of tons of that scrap goes has shifted from traditional integrated mills to minimills, which don't really have any other options. Now that's not to say that the face of the steel industry won't continue to change from traditional ore (or more accurately, taconite pellets) in blast furnaces- technologies like DRI pellets/briquettes, which shift more of the refining to the ore processor's end of things and result in a product which is derived directly from mined ore but can be used in an electric arc furnace (like in a minimill) may be a big part of the future, allowing more tonnage to be shifted from blast furnaces to EAFs. But put it this way, if 100% of this country's steel production shifted to the EAF process, somehow the industry-wide ratio of scrap remelt to virgin iron will simply have to approximate what it is today. Either that, or prices for steel (and scrap) will necessarily skyrocket.

by **Guest** » March 8, 2021, 10:10 am

Hobieone wrote:Someone please correct me if I'm wrong or have a less than complete understanding, but mini mills generally produce steel from remelts of scrap and/or the addition of pig iron or direct reduced iron.
I understand that the energy efficiencies are better in minimills for BTUs/ton, they all deal with some form of "pre'processed" material; steel or iron.
Somewhere, at sometime, Iron will have to be smelted from it's ore. Chemically and metallurgically, that's an entirely different process than filling a vat with scrap and zapping it with the mother of all arc welders and a couple of thousand KwH.
Recycling is good and can be efficient for both man and material, but sooner or later, somewhere, there is going to have to be a miner taking it from the earth. And for that effort, there will always be boats waiting to carry it. What's left for debate, is number and frequency.
Just my take on it . thnx

The view of there will always be boats to carry it relies on the fact that any of the surviving integrated mills are located in the Great Lakes region or rely on transportation routings involving the movement by lake carrier. Unfortunately, it seems that there is little to no investment being made with the current steel mills bordering the lakes and I believe that the last one to open on the US side was at Burns Harbor in 1969. As these mill age, it will be necessary to either make significant investments or build new mills. With the existing environmental constraints, I highly doubt there will be any new integrated steel mills built any time soon. As such, the current facilities will be used until they are no longer economically viable and eventually disapear. About the only bright spot in all of this to come along in the past few years was the opening of Cleveland Cliff's facility at Toledo facility to produce briquets for mini-mill consumption. This may signal a new era in taconite transportation on the Great Lakes. You are correct, however, that there will always be a need for new steel production from raw materials but I would predict to see more and more of that coming from overseas as has been happening since the 1960s. I have followed Great Lakes shipping since the late 1970s and the steel industry upon which much of it (at least on the US side) serves has been in a steady decline and there seems to be no end in sight of this trend. Even though the 1980s was one of the bleakest times for shipping on the lakes, I would say that the future of the industry looked better back then than it does today.

by **Hobieone** » March 8, 2021, 8:29 am

Someone please correct me if I'm wrong or have a less than complete understanding, but mini mills generally produce steel from remelts of scrap and/or the addition of pig iron or direct reduced iron.
I understand that the energy efficiencies are better in minimills for BTUs/ton, they all deal with some form of "pre'processed" material; steel or iron.
Somewhere, at sometime, Iron will have to be smelted from it's ore. Chemically and metallurgically, that's an entirely different process than filling a vat with scrap and zapping it with the mother of all arc welders and a couple of thousand KwH.
Recycling is good and can be efficient for both man and material, but sooner or later, somewhere, there is going to have to be a miner taking it from the earth. And for that effort, there will always be boats waiting to carry it. What's left for debate, is number and frequency.
Just my take on it ............. thnx

by **Jon Paul** » March 7, 2021, 10:34 pm

Another link to an update on Cliffs expansion.

https://seekingalpha.com/article/441208 ... sformation

by **Guest** » March 4, 2021, 10:53 am

I strongly doubt that prices would soar ( I think you mean shipping rates?).

The reason why is two fold. First is the fact that the Southern US mini-mills produce on average 90,000 to 100,00 tons more raw steel per week than the Great Lakes region. Second is the coming online of new mini-mill capacity this year and next; about 15 million tons per year. That means an oversupply of raw steel in the US, and a potential a shakeout of higher-cost blast furnace capacity (possibly one or both of the blast furnaces in Granite City).

While there will be a reduction in hull bottoms available to carry iron ore pellets ( loss of St. Clair and Roger Blough - hope she's repaired), that could very well be offset by hulls available in the declining western-coal trade, as you mentioned.

- Brian

by **bckid2002** » March 3, 2021, 7:45 pm

I think with high demand to move pellets and the loss of a few hulls for the season, shipping prices could soar. Maybe the less western coal being hauled could offset that though. Thoughts ?

by **KHenry** » March 3, 2021, 5:39 pm

I was originally skeptical that Cleveland-Cliffs would make any moves on the transportation aspect, as that is often one of the main areas that companies typically outsource. US Steel and Arcelor-Mittal were both already largely vertically integrated but chose not to pursue any further control over the transportation of their pellets (outside of CML for Arcelor-Mittal). However, several weeks ago I drove past AK Steel's tubular facility in Walbridge, OH, and noticed a semi loading (presumably) finished goods. The trailer's sides were embalzoned with the AK Steel name, with "a Cleveland-Cliffs Company" placed below it. It's clear that AK Steel directly controlled at least some of the transportation for their finished goods. If Cleveland-Cliffs continues to find value in that, perhaps eventually that will also extend to the lakes and the movement of their pellets. Food for thought.

by **Jon Paul** » March 1, 2021, 8:34 pm

Here is an update on Cliffs and AK Steel. I still believe they are going to make some moves concerning hauling contracts and the important connection of their mining/milling operations and their steel making facilities. It would also not surprise me that when the dust settles that the current ASC/Rand situation will be effected by it.

https://news.yahoo.com/union-president- ... 00834.html

by **garbear** » February 9, 2021, 3:26 pm

Jon Paul wrote:Some interesting goings on in Minnesota;

https://m.startribune.com/cleveland-cli ... 600020645/

Latest from the Strib.

http://e.startribune.com/Olive/ODN/Star ... &mode=text

by **Guest** » February 9, 2021, 3:06 pm

Jon Paul wrote:Some interesting goings on in Minnesota;

https://m.startribune.com/cleveland-cli ... 600020645/

A related article from a couple of days ago:

The clash of two big steel companies will help shape the future of the Iron Range

by **Guest** » February 9, 2021, 2:05 pm

Realistically, what is the future of iron ore mining in the Great Lakes region? With the continued decline of steel productionand the seemingly unending closures of integrated steel mills in favor of mini-mills I question as to how much cargoes will be needed to be carried on the lakes in the upcoming decades. I know this is a thorny issue but one that is worthy of discussion. Coal for power generation is in its final days and I would not be surprised that the next targets for global warming advocates will be heavy industries like the steel mills. Do the mini-mills create less pollution and greenhouse emissions than an integrated steel mill? Furthermore, I don't hear much about any major upgrades being done at the steel mills bordering the lakes. I know there is a new ore briquet facility at Toledo but isn't there only one steel mill left in Cleveland? I also believe that steel is no longer produced at Lorain and that Detroit is down to only one steel mill. Hasn't much of the former Inland Steel operations at Indiana Harbor been shuttered? Not trying to be cynical or political, just some observations from someone who grew up in the region and witnessed the decline since the 1970s.

by **Jon Paul** » February 9, 2021, 12:37 pm

Some interesting goings on in Minnesota;

https://m.startribune.com/cleveland-cli ... 600020645/

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